Montpelier Re Reports Fourth Quarter and Full Year Financial Results

  Montpelier Re Reports Fourth Quarter and Full Year Financial Results

  *Fully converted book value per common share of $26.14, a 17.0% increase
    for the full year, including common dividends.
  *A 46% loss ratio and 81% combined ratio for the full year, which includes
    $94 million, or 15 points, of net losses incurred as a result of windstorm
    Sandy.

Business Wire

HAMILTON, Bermuda -- February 7, 2013

Montpelier Re Holdings Ltd. (NYSE: MRH), (“Montpelier” or the “Company”), a
leading global provider of property catastrophe reinsurance and other
specialty lines, today reported its financial results for the fourth quarter
and year ended December 31, 2012.

Fully converted book value per common share was $26.14, a decrease of 1.3% for
the fourth quarter and an increase of 17.0% for the full year, each computed
after taking into account common share dividends declared during each period.

The operating loss for the quarter was $0.31 per common share ($17 million)
and the net loss was $0.48 per common share ($27 million), each expressed
after preferred share dividends. The net loss for the quarter includes $3
million of realized and unrealized investment gains, $3 million of net foreign
exchange losses and a $10 million loss on early extinguishment of debt.

Despite the loss for the quarter, operating income for the year was $2.58 per
common share ($151 million) and net income was $3.67 per common share ($214
million), each expressed after preferred share dividends. Net income for the
year includes $82 million of realized and unrealized investment gains, $9
million of net foreign exchange losses and a $10 million loss on early
extinguishment of debt.

Net premiums written were up 2% in the quarter, or 19%, when adjusting for
reinstatement premiums ($5 million) and the sale of MUSIC ($15 million).

The quarterly result included a $94 million loss (net of reinsurance
recoveries and reinstatements) from windstorm Sandy, consistent with our
December announcement, which was partially offset by $26 million in prior-year
loss reserve development. The combined ratio was 116% for the quarter. The
loss ratio and the combined ratio for the full year were 46% and 81%,
respectively.

Net investment income for the quarter was $17 million and $67 million for the
full year. The total return on the investment portfolio was 0.6% for the
quarter and 5.2% for the full year.

Christopher Harris, President and Chief Executive Officer, said, “I am pleased
with our performance for the year. Despite windstorm Sandy, we produced 17%
growth in fully converted book value per share on the strength of our balanced
underwriting portfolio and solid investment results. Both our Bermuda and
Lloyd’s underwriting platforms delivered strong profitability.”

“We were also pleased to further expand our underwriting partnerships with the
successful launch of the Blue Capital asset management platform in December.”

Mr. Harris continued, “Our underwriting teams executed well during a
competitive January renewal season. We expect a modest increase of 1% to 5%
for net written premiums in the first quarter of 2013 driven by targeted
growth in our property catastrophe and marine portfolios offset by reductions
within certain other specialty lines.”

During the fourth quarter the Company repurchased 590,000 common shares at an
average price of $22.52 per share ($13 million). During 2012, the Company
repurchased 5,981,589 shares at an average price of $20.22 per share ($121
million).

As of December 31, 2012, total shareholders' equity was $1.6 billion and total
capital was $2.0 billion. On October 5, 2012, the Company issued $300 million
of 10-year senior notes with a 4.7% coupon. The proceeds from this issuance
were used to redeem, on November 5, 2012, our then outstanding $228 million
6.125% senior notes due in 2013, with the balance being used for general
corporate purposes.

Please refer to Montpelier’s December 31, 2012 Financial Supplement for more
detailed financial information, which is posted on the Company’s website at
www.montpelierre.bm.

Montpelier, through its operating subsidiaries, is a premier provider of
global property and casualty reinsurance and insurance products. Additional
information can be found in Montpelier's public filings with the Securities
and Exchange Commission.

Earnings Conference Call:

The Company will conduct a conference call, including a question and answer
session, on Friday, February 8, 2013 at 8:00 a.m. Eastern Time.

The presentation will be available via a live audio webcast accessible on the
Company's website at www.montpelierre.bm or by dialing 1-877-317-6016 (US toll
free), 1-412-317-6016 (international) or 1-855-669-9657 (Canada toll free). A
telephone replay of the conference call will be available through March 8,
2013 by dialing 1-877-344-7529 (toll-free) or 1-412-317-0088 (international)
and entering the passcode 10023494.

Application of the Safe Harbor of the Private Securities Litigation Reform Act
                                   of 1995

This press release contains forward-looking statements within the meaning of
the United States federal securities laws, pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995, that are
not historical facts, including statements about our beliefs and expectations.
These statements are based upon current plans, estimates and projections.
Forward-looking statements rely on a number of assumptions concerning future
events and are subject to a number of uncertainties and various risk factors,
many of which are outside the Company's control. See “Risk Factors” contained
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2011,
as filed with the Securities and Exchange Commission, for specific important
factors that could cause actual results to differ materially from those
contained in forward- looking statements. In particular, statements using
words such as “may,” “should,” “estimate,” “expect,” “anticipate,” “intend,”
“believe,” “predict,” “potential,” or words of similar meaning generally
involve forward-looking statements.

Important events and uncertainties that could cause our actual results, future
dividends on, or repurchases of, our common shares or preferred shares to
differ include, but are not limited to: market conditions affecting the prices
of our common shares or preferred shares; the possibility of severe or
unanticipated losses from natural or man-made catastrophes, including those
that may result from changes in climate conditions, including, but not limited
to, global temperatures and expected sea levels; the effectiveness of our loss
limitation methods; our dependence on principal employees; our ability to
effectively execute the business plans of the Company, its subsidiaries and
any new ventures that it may enter into; the cyclical nature of the insurance
and reinsurance business; the levels of new and renewal business achieved;
opportunities to increase writings in our core property and specialty
insurance and reinsurance lines of business and in specific areas of the
casualty reinsurance market and our ability to capitalize on those
opportunities; the sensitivity of our business to financial strength ratings
established by independent rating agencies; the inherent uncertainty of our
risk management process, which is subject to, among other things, industry
loss estimates and estimates generated by modeling techniques; the accuracy of
written premium estimates reported by cedants and brokers on pro-rata
contracts and certain excess-of-loss contracts where a deposit or minimum
premium is not specified in the contract; the inherent uncertainties of
establishing reserves for loss and loss adjustment expenses, unanticipated
adjustments to premium estimates; changes in the availability, cost or quality
of reinsurance or retrocessional coverage; changes in general economic and
financial market conditions; changes in and the impact of governmental
legislation or regulation, including changes in tax laws in the jurisdictions
where we conduct business; the amount and timing of reinsurance recoverables
and reimbursements we actually receive from our reinsurers; the overall level
of competition, and the related demand and supply dynamics in our markets
relating to growing capital levels in our industry; declining demand due to
increased retentions by cedants and other factors; the impact of terrorist
activities on the economy; rating agency policies and practices; unexpected
developments concerning the small number of insurance and reinsurance brokers
upon whom we rely for a large portion of revenues; our dependence as a holding
company upon dividends or distributions from our operating subsidiaries; and
the impact of foreign currency fluctuations.

We undertake no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or
otherwise. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the dates on which they are
made.

MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED BALANCE SHEETS
(in millions of U.S. dollars, except share and per share amounts)
unaudited
                                                     
                                        December 31,        December 31,
                                   2012                 2011
  Assets
                                                                            
  Fixed maturity investments, at       $ 2,738.6             $ 2,390.2
  fair value
  Equity securities, at fair value       40.9                  96.1
  Other investments                      138.5                 102.4
  Cash, restricted cash and cash        401.4            468.7     
  equivalents
                                                                            
              Total Investments and      3,319.4               3,057.4
              Cash
                                                                            
  Reinsurance recoverable on unpaid      102.7                 77.7
  losses
  Reinsurance recoverable on paid        6.7                   7.7
  losses
  Insurance and reinsurance premiums     222.9                 213.4
  receivable
  Unearned reinsurance premiums          22.2                  22.0
  ceded
  Deferred insurance and reinsurance     48.4                  50.9
  acquisition costs
  Accrued investment income              15.2                  16.2
  Unsettled sales of investments         48.9                  33.9
  Other assets                          23.7             20.3      
                                                                            
  Total Assets                        $ 3,810.1         $ 3,499.5   
                                                                            
  Liabilities
                                                                            
  Loss and loss adjustment expense     $ 1,112.4             $ 1,077.1
  reserves
  Debt                                   399.1                 327.8
  Unearned insurance and reinsurance     270.1                 265.9
  premiums
  Insurance and reinsurance balances     54.0                  44.0
  payable
  Liability for investment               138.8                 136.3
  securities sold short
  Unsettled purchases of investments     148.7                 69.9
  Accounts payable, accrued expenses    57.6             29.2      
  and other liabilities
                                                                            
              Total Liabilities         2,180.7          1,950.2   
                                                                            
  Shareholders’ Equity
                                                                            
  Non-cumulative preferred shares        150.0                 150.0
  Common shares and additional           1,056.1               1,165.7
  paid-in capital
  Common shares held in treasury, at     (23.1     )           (22.0     )
  cost
  Retained earnings                      449.7                 259.7
  Accumulated other comprehensive       (3.3      )       (4.1      )
  loss
                                                                            
              Total Shareholders’       1,629.4          1,549.3   
              Equity
                                                                            
  Total Liabilities and               $ 3,810.1         $ 3,499.5   
  Shareholders’ Equity
                                                                            
  Common and common equivalent
  shares outstanding:
                                                                            
  Common shares outstanding (000s)       55,270       sh       60,864       sh
  Common and common equivalent           56,596                61,625
  shares outstanding (000s)
                                                                            

MONTPELIER RE HOLDINGS LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in millions of U.S. dollars, except per share amounts)
unaudited
                                                   
                    Three Months Ended           Year Ended
                           December 31,                  December 31,
                   2012        2011          2012        2011
                                                                 
  Underwriting
  revenues
                                                                      
  Gross insurance
  and reinsurance        $ 94.4       $ 91.7           $ 735.3      $ 725.5
  premiums written
  Ceded
  reinsurance             (11.0  )   (10.1  )        (119.6 )   (101.5 )
  premiums
  Net insurance
  and reinsurance        $ 83.4     $ 81.6          $ 615.7    $ 624.0  
  premiums written
                                                                      
  Gross insurance
  and reinsurance        $ 193.0      $ 179.2          $ 736.3      $ 721.1
  premiums earned
  Earned
  reinsurance             (36.4  )   (30.9  )        (119.8 )   (98.4  )
  premiums ceded
  Net insurance
  and reinsurance          156.6        148.3            616.5        622.7
  premiums earned
                                                                      
  Underwriting
  expenses
                                                                      
  Loss and loss
  adjustment               (154.2 )     (138.6 )         (373.8 )     (701.4 )
  expenses -
  current year
  Loss and loss
  adjustment               26.3         18.0             87.4         89.3
  expenses - prior
  year
  Insurance and
  reinsurance              (24.7  )     (27.7  )         (96.6  )     (105.4 )
  acquisition
  costs
  Operating                (19.6  )     (22.1  )         (79.4  )     (88.3  )
  expenses
  Incentive
  compensation             (9.4   )     (3.0   )         (36.8  )     (10.3  )
  expenses
                                                             
  Underwriting            (25.0  )   (25.1  )        117.3     (193.4 )
  income (loss)
                                                                      
  Net investment           16.8         17.1             67.1         68.7
  income
  Other revenue            -            0.2              0.8          0.5
  Net realized and
  unrealized               3.5          31.5             82.4         26.2
  investment gains
  Net foreign              (2.3   )     (1.4   )         (12.8  )     (5.2   )
  exchange losses
  Net income
  (loss) from              (1.1   )     (0.1   )         3.2          (3.1   )
  derivative
  instruments
  Interest and
  other financing          (5.9   )     (4.9   )         (20.4  )     (20.6  )
  expenses
  Gain on sale of          -            11.1             -            11.1
  MUSIC
  Loss on early
  extinguishment           (9.7   )                      (9.7   )     -
  of debt
  Income tax
  benefit                  0.4          -                (0.3   )     0.6
  (provision)
                                                             
  Net income               (23.3  )     28.4             227.6        (115.2 )
  (loss)
                                                                      
  Dividends
  declared on              (3.3   )     (3.4   )         (13.3  )     (9.1   )
  non-cumulative
  preferred shares
                                                             
  Net income
  (loss) available    $ (26.6  )  $ 25.0       $ 214.3    $ (124.3 )
  to common
  shareholders
                                                                      
  Net income             $ (23.3  )   $ 28.4           $ 227.6      $ (115.2 )
  (loss)
                                                                      
  Net change in
  foreign currency         0.3          0.1              0.8          2.1
  translation
                                                             
  Comprehensive       $ (23.0  )  $ 28.5       $ 228.4    $ (113.1 )
  income (loss)
                                                                      
  Basic and
  diluted earnings    $ (0.48  )  $ 0.40       $ 3.67     $ (2.01  )
  (loss) per
  common share
                                                                      
  Insurance
  ratios:
                                                                      
  Loss and loss
  adjustment
  expense ratio:
      Current year         98.5   %     93.4   %         60.6   %     112.6  %
      Prior year          -16.8  %   -12.1  %        -14.2  %   -14.3  %
  Loss and loss
  adjustment               81.7   %     81.3   %         46.4   %     98.3   %
  expense ratio
  Acquisition              15.8   %     18.7   %         15.7   %     16.9   %
  costs ratio
  Operating                12.5   %     14.9   %         12.9   %     14.2   %
  expense ratio
  Incentive
  compensation            6.0    %   2.0    %        6.0    %   1.7    %
  expense ratio
  Combined ratio       116.0  %   116.9  %     81.0   %   131.1  %
                                                                             

MONTPELIER RE HOLDINGS LTD.
RECONCILIATION OF NET INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS
TO OPERATING INCOME (LOSS) AVAILABLE TO COMMON SHAREHOLDERS ^1
(in millions of U.S. dollars)
unaudited
                                                       
                      Three Months Ended         Year Ended
                      December 31,               December 31,
                    2012        2011          2012          2011
                                                                            
Net income (loss)
available to common   $  (26.6  ) $ 25.0         $ 214.3        $ (124.3  )
shareholders
                                                                            
Add (subtract):
Net realized             (6.2   )   (9.1    )      (56.7   )      (34.6   )
investment gains
Net unrealized
investment losses        2.7        (22.4   )      (25.7   )      8.4
(gains)
Net losses from
investment-related       0.4        2.7            -              9.0
derivative
instruments ^2
Net foreign exchange     2.3        1.4            12.8           5.2
losses
Net losses (gains)
from foreign
exchange-related         0.8        (2.7    )      (3.5    )      (7.0    )
derivative
instruments ^2
Gain on sale of MUSIC    -          (11.1   )      -              (11.1   )
Loss on early
extinguishment of       9.7      -            9.7         -       
debt
Operating income      $  (16.9  ) $ (16.2   )   $ 150.9      $ (154.4  )
(loss)
                                                                            
Operating income
(loss) per common     $  (0.31  ) $ (0.27   )   $ 2.58       $ (2.50   )
share
                                                                            
MONTPELIER RE HOLDINGS LTD.
BOOK VALUE PER COMMON SHARE ^1
unaudited
                                                       
                                  Dec. 31,       Sept. 30,      Dec. 31,
                              2012          2012          2011
Book value per share
numerators (in
millions of U.S.
dollars):
                                                                            
Shareholders' equity              $ 1,629.4      $ 1,674.0      $ 1,549.3
                                                                            
less: Non-cumulative               (150.0  )    (150.0  )    (150.0  )
preferred shares
                                                                            
         Fully
         converted
[A]      book value               $ 1,479.4    $ 1,524.0    $ 1,399.3 
         per common
         share
         numerator
                                                                            
Book value per share
denominators (in
thousands of common
shares):
                                                                            
         Common
[B]      shares                     55,270    sh   55,523    sh   60,864    sh
         outstanding
                                                                            
         Restricted
         share units               1,326       1,741       761     
         outstanding
                                                                            
         Fully
         converted
[C]      book value                56,596   sh  57,264   sh  61,625   sh
         per common
         share
         denominator
                                                                            
Book value per common             $ 26.77        $ 27.45        $ 22.99
share [A] / [B]
Fully converted book
value per common                    26.14          26.61          22.71
share [A] / [C]
                                                                            
Change in fully
converted book value
per common share: ^3
                                                                            
         From
         September                  -1.3    %
         30, 2012
         From
        December 31,            17.0    %                
         2011
                                                                            
^1      These measures constitute "non-GAAP financial measures" as defined in
         Regulation G and as further described herein.
         Represents the portion of our net income or expense from derivative
^2      instruments that constitute investment and foreign exchange gains and
         losses.
         Computed as the change in fully converted tangible book value per
^3      common share after taking into account common dividends declared of
         $0.115 and
         $0.43 during the three and twelve month periods ended December 31,
         2012, respectively.

Contact:

Montpelier Re Holdings Ltd.
Investors:
William Pollett, 441-299-7576
SVP, Chief Corporate Development and Strategy Officer and Treasurer
or
Media:
Jeannine Menzies, 441-299-7570
Corporate Affairs Manager